The failures of our
political leaders over the last decade ushered in an opening for Donald Trump to
obtain the presidency.Trump cleverly
realized this and seized on the opportunity.Trump’s campaign was full of rhetoric and promises seemingly made
without true regard to what was achievable.Now that Trump has captured the presidency we will likely see an agenda
laid out that is more realistic with what this country can afford and the
Congress will accept.

Wall Street and
corporate America was a strong supporter of Clinton as she promised the
continuation of policy that they had grown comfortable with and sought to have
continued. Several sectors of our economy received favoritism by the Obama
regime that may not continue under Trump.The media and Wall Street got so caught up in attacking Trump by
fabricating policies and extrapolating on policies they claimed Trump would
unleash on our economy and the world, that they began to believe this nonsense
themselves. Wall Street and emotional investors are now seemingly making poorly
researched investments based upon the policies and rhetoric talked about during
the campaign.As a result the four tech
giants have declined by 5 to 10% since the election.Amazon has fallen over 9%. Fixed income
markets have fallen 5% or more with yields on treasury rising by over 50 basis
points.Emerging markets have fallen
over 10%. Gold has declined close to 10%. Conversely Industrial stocks have
gained over 5%. Biotech has gained over 12%.Small-cap stocks have gained 8%. Financial stocks have gained over
10%.The broader market as measured by
the S&P 500 has risen 1.5%, the Dow Jones industrial average has risen
3.3%, and Concord’s Dynamic Growth has gained 0.2%.

While the markets have
changed a bit overall, and quite a bit among sectors, the economy remains the
same.The outlook for growth is still
challenged with the growth in global consumption at the lowest level it has
been in years.

Prior to the election
the best growth in earnings for 2017 was expected from technology, healthcare,
and consumer cyclical sectors, as measured by the consensus of Wall Street
analysts and as evidenced in the weightings of our portfolio. Those
expectations remain the same today but the recent market performance indicates
that investors believe we are on the verge of a change in leadership in
earnings for the year ahead.Experience
has told us that markets become emotional in the short-term but eventually are
fairly efficient at discounting earnings growth.Is the new leadership in the market an
irrational emotional response to the rhetoric of the campaign of Mr.
Trump?We suspect that this is true.Most presidents generally seek to move on
their campaign promises, but this maverick is clearly known to not be
accountable to previous statements or promises.Now that Mr. Trump has the presidency secured, information about his
true intentions will start to emerge and the markets will react as that
information leaks out.Further, it is
not unreasonable to infer that some of the things Mr. Trump has promised will
unfold.These things will likely include
but not be limited to strong reforms to immigration, tax cuts for corporate
America, de-regulation of the unfair handcuffs on small businesses, opening up
more land for drilling and energy production, changes to trade policies with
China and other emerging markets, healthcare reform that abolishes Obama care
with a new program that centers more on lower prices from free markets across
state lines, and a significant reduction in spending on entitlement programs.

I suspect that Mr.
Trump will go to the American people with a plan to clean up the swamp in
Washington with some sort of term limit legislation as well as tough
enforceable legislation prohibiting self-dealing.

This is a lot for Trump
to accomplish.Who will benefit if we
are correct.It would seem like our
exposure to small-cap stocks needs to be raised at the expense of large caps
exposed to significant trade with China.Energy will benefit from less regulation and is already cheap given
where the price of oil is today. Energy needs to increase in our portfolio and be reallocated.

The financial and
industrial sectors were already expensive prior to the Trump presidency as
investors pushed these areas up despite a poor outlook for earnings. With
American government debt already at 15 trillion, the idea of spending another
trillion or more on infrastructure may be re-evaluated by Mr. Trump.The selloff in treasuries and the rally in
bank stocks is likely overcooked in the short term.

Overall, we do not
expect a significantly different looking economy over the next few years than
we have already experienced over the past few. We believe Mr. Trump will make
change and will likely go down as a highly successful president but we believe
it will take a second term to accomplish all of his agenda and make a significant
dent in the problem we have currently with growth.There is simply no quick solution to our
growth problem.